I 111th CONGRESS 2d Session H. R. 4743 IN THE HOUSE OF REPRESENTATIVES March 3, 2010 Mr. Larson of Connecticut (for himself, Mr. Sam Johnson of Texas, Mr. Bishop of Georgia, and Ms. Eddie Bernice Johnson of Texas) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide tax benefits to individuals who have been wrongfully incarcerated.

1.

Short title

This Act may be cited as the Wrongful Convictions Tax Relief Act of 2010.

2.

Exclusion for wrongfully incarcerated individuals

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139C the following new section:

139D.

Certain amounts received by wrongfully incarcerated individuals

(a)

Exclusion from gross income

Gross income shall not include— (1)in the case of any wrongfully incarcerated individual, any civil damages, restitution, or other monetary award (including compensatory or statutory damages and restitution imposed in a criminal matter) relating to the incarceration of such individual for the covered offense for which such individual was convicted, and (2)in the case of a qualified wrongfully incarcerated individual, the first $50,000 of income received by such individual in any taxable year beginning after December 31, 2009. (b)

Limitation relating to income exclusion

(1)

In general

The exclusion under subsection (a)(2) shall not apply to any qualified wrongfully incarcerated individual for any taxable year other than a taxable year in the qualified benefit period with respect to such individual. (2)

Qualified benefit period

For purposes of paragraph (1), the term qualified benefit period means, with respect to any qualified wrongfully incarcerated individual, the first 15 taxable years ending after the first date on which such individual is a wrongfully incarcerated individual. (3)

Limitation based on years of incarceration

In the case of a qualified wrongfully incarcerated individual who served a sentence of imprisonment of less than 15 years for the covered offense with respect to which such individual is a qualified wrongfully incarcerated individual, the number of full years that such individual was so imprisoned shall be substituted for 15 in paragraph (2). (4)

Termination of exclusion upon conviction of subsequent offense

If a qualified wrongfully incarcerated individual is convicted of a criminal offense under Federal or State law that is punishable by more than 1 year imprisonment at any time during the qualified benefit period, subsection (a)(2) shall not apply to the taxable year which includes the date of such conviction and all subsequent taxable years. (c)

Wrongfully incarcerated individual

For purposes of this section— (1)

In general

The term wrongfully incarcerated individual means an individual— (A)who was convicted of a covered offense, (B)who served all or part of a sentence of imprisonment relating to that covered offense, and (C)(i)who was pardoned, granted clemency, or granted amnesty for that covered offense because that individual was innocent of that covered offense, or (ii)(I)for whom the judgment of conviction for that covered offense was reversed or vacated, and (II)for whom the indictment, information, or other accusatory instrument for that covered offense was dismissed or who was found not guilty at a new trial after the judgment of conviction for that covered offense was reversed or vacated. (2)

Covered offense

The term covered offense means any criminal offense under Federal or State law, and includes any criminal offense arising from the same course of conduct as that criminal offense. (d)

Qualified wrongfully incarcerated individual

For purposes of this section, the term qualified wrongfully incarcerated individual means a wrongfully incarcerated individual who, except for the covered offense described in subsection (c)(1)(A), has never been convicted of a criminal offense (other than a juvenile offense) under Federal or State law that is punishable by more than 1 year imprisonment. (e)

Reporting requirements

For purposes of this section and section 36B, the Secretary shall impose such reporting requirements as the Secretary determines necessary or appropriate to carry out this section, including a requirement that the individual include with the return of tax for the taxable year a statement or attestation that the individual has not been subsequently convicted of a crime within the meaning of subsection (b)(4).

. (b)

Conforming amendment

The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139B the following new item: Sec. 139D. Certain amounts received by wrongfully incarcerated individuals. . (c)

Effective date

The amendments made by this section shall apply to taxable years beginning before, on, or after the date of the enactment of this Act.

3.

Refundable credit for employment taxes paid by wrongfully incarcerated individuals

(a)

Allowance of refundable credit

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36A the following new section:

36B.

Employment taxes of wrongfully incarcerated individuals

(a)

In general

In the case of a qualified wrongfully incarcerated individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of— (1)50 percent of the taxes imposed on the self-employment income of such individual under subsections (a) and (b) of section 1401 during the taxable year, plus (2)the taxes imposed on the wages received by such individual with respect to employment under subsections (a) and (b) of section 3101 during the taxable year. (b)

Limitations

(1)

Dollar limitation

The total amount of wages and self-employment income taken into account under subsection (a) with respect to any individual for any taxable year shall not exceed $50,000. (2)

Taxable year limitation

The credit under subsection (a) shall not be allowed to any qualified wrongfully incarcerated individual for any taxable year other than a taxable year in the qualified benefit period determined with respect to such individual under paragraphs (2) and (3) of section 139D(b). (3)

Termination of credit upon conviction of subsequent offense

If a qualified wrongfully incarcerated individual is convicted of a criminal offense under Federal or State law that is punishable by more than 1 year imprisonment at any time during the qualified benefit period (as so determined), subsection (a) shall not apply to the taxable year which includes the date of such conviction and all subsequent taxable years. (c)

Qualified wrongfully incarcerated individual

For purposes of this section, the term qualified wrongfully incarcerated individual has the meaning given to such term under section 139D(d). (d)

Reference

For reporting requirement, see section 139D(e).

. (b)

Conforming amendments

(1)Section 1324(b)(2) of title 31, United States Code, is amended by inserting , 36B, after 36A,. (2)The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36A the following new item: Sec. 36B. Employment taxes of wrongfully incarcerated individuals. . (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2009.